Page 178 - GSTL_23rd April 2020_Vol 35_Part 4

504 GST LAW TIMES [ Vol. 35
19.3 This office humbly puts forth before the Hon’ble Appellate Au-
thority that it sticks up with the submission made before the Advance Ruling
Authority. This office would like to draw attention of the Hon’ble Authority that
the applicant has agreed that the breakwater wall is an immovable property
(please refer page No. 14 of the Advance Ruling order). And according to the
Section 17(5)(d) of the CGST/MGST Act, ITC shall not be available when goods
or services or both received by a taxable person for construction of an immovable
property (other than plant and machinery).
19.4 And as per the explanation of plant and machinery, given in the
Section 17(6) of the CGST/MGST
“plant and machinery means apparatus, equipments and machinery
fixed to earth by foundation or structural support that are used for making
outward supply of goods or services or both and includes such foundation
and structural support but excludes
(i) Land, Building or any other Civil Structure
(ii) Telecommunication Towers; and
(iii) Pipelines laid outside the factory premises.”
The breakwater wall does not support or act as a foundation to any ma-
chinery, equipment or apparatus; rather it is an independent civil structure.
1 19.4 In the grounds of law of appeal at the point No. 2 the applicant
says that, “because on the facts and circumstances of the case, the Learned ARA
has failed to appreciate Section 17(5)(d) read with explanation when it stated that
breakwater being an immovable property cannot be considered as plant and ma-
chinery, whereas the position of law is otherwise. The foundation or structural
support of the plant & machinery, even though it is an immovable property, will
be considered as an integral part of plant & machinery. Therefore all immovable
structures are not disqualified from being covered in the term plant & machin-
ery.” Here if we read Section 17(5)(d) with the explanation in Section 17(6) it
makes clear that any immovable civil structure attached to the apparatus,
equipments and machinery can be treated as plant and machinery whereas the
breakwater wall is an independent civil structure.
19.5 In a High Court ruling in the case of Mazgaon Dock Limited - re-
ported in 191 ITR 460, the same had been quoted by the applicant in his Advance
ruling application in support of his ITC claim on breakwater wall, wherein the
Hon. Court has stated that,
“In order for a building or concrete structure to qualify for inclusion
in the term plant, it must be established that it is impossible for the equip-
ment to function without the particular type of structure.”
19.6 In the grounds of law of appeal at the point No. 3 the applicant has
questioned the essentiality test and quoted that no such essentiality test provided
in the explanation to Section 17 of the CGST/MGST Act. But the essentiality test
is a logical and substantial test to consider any structure to be a part of plant and
machinery, hence the above ruling cannot be neglected. Further, the applicant
has shown total outward supply of Rs. 4,11,08,38,049/- in the GST return Form
GSTR-3B filed for the period from April, 2018 to August, 2019, which reveals that
his activities are efficiently carrying on, which proves that it is not impossible for
the applicant to function without the breakwater wall. Hence the activity of con-
struction of breakwater wall falls under the Section 17(5)(d).
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1 Paragraph number as per official text.
GST LAW TIMES  23rd April 2020  298